This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank of America Heads Back to the Drawing Board

Stocks in this article: BAC C JPM WFC GS BLK MET BK

Updated with Bank of America's comment.

NEW YORK ( TheStreet) -- The Federal Deposit Insurance Corp.'s court filing on Monday objecting to Bank of America's (BAC) $8.5 billion settlement of Countrywide mortgage putback claims, could put the final nail in the coffin for the settlement.

The nation's largest bank arrived at the Countrywide settlement in June with a group of institutional investors that included BlackRock (BLK), MetLife (MET), subsidiaries of Goldman Sachs (GS) ING Groep (ING), and the Federal Home Loan Bank of Atlanta. Bank of New York Mellon (BK) -- the trustee of the affected mortgage-backed-securities trusts -- has asked a New York judge to approve the settlement in November, according to a Bloomberg Report.

Bank of America CEO Brian Moynihan

Andrew Gray, the director of the FDIC's Office of Public Affairs, said the agency's court filing was "simply a formal notice to preserve our right to make claims as a part of the settlement and seeks additional information to evaluate those potential claims," and that the filing was "not an evaluation or opinion on the settlement itself."

The filing is a "Notice of Intention to Appear of Object," and the agency is objecting to the agreement because it is holding Countrywide mortgage paper "covered by the proposed settlement" inherited from "numerous" failed banks, because it "does not have enough information to evaluate the Settlement."

The FDIC joins various other parties objecting to the Countrywide settlement, including six of the 12 Federal Home Loan Banks (according to Bloomberg News), several public pension funds (according to Reuters), and New York State Attorney General Eric Schneiderman.

Bank of America spokesman Lawrence Grayson said "we believe that the trustee acted reasonably in entering into the settlement, and that there are compelling reasons why the agreement should receive judicial approval."

The FDIC is required under law to recover as much as possible on the problem assets it has retained after selling-off the choicest assets of failed banks, which could cause the agency to take an independent course from the Obama Administration.

One indication of this was the Obama Administrations pressure on Schneiderman to agree to a broad settlement of the mortgage foreclosure mess, between federal regulators, the states, and the largest U.S. mortgage servicers, including Bank of America (which acquired Countrywide in 2008), JPMorgan Chase (JPM) (which acquired the failed Washington Mutual from the FDIC in 2008), Wells Fargo (WFC) (which acquired Wachovia in 2008) and Citigroup (C).

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs